Forewarned: Love Doesn't Always Last Forever

Forewarned: Love Doesn't Always Last Forever

When Nancy met Jeffrey Facter she was a part-time shoe salesperson at a Nordstrom's Department Store. She was the mother of two small children, and in the process of getting a divorce from the children's father. They fell in love, and Jeffrey began providing for Nancy's financial needs. He bought a house for Nancy and her children to live in and gave her money for expenses. She hated selling shoes and wanted to be a real estate agent. So, he paid for the real estate schooling allowing her to obtain her real estate license. Jeffrey wanted something too. He wanted to be a father. Nancy told him she would not give him any children unless they got married first. Jeffrey was a lawyer on a career fast track. He had graduated from Harvard Law School and was just about to make partner at the law firm he worked at. He was afraid that if he married, he could lose everything he had worked hard for if his marriage ended in divorce. He agreed to marry Nancy, but only if she signed a premarital agreement. He then wrote an agreement for Nancy to sign. The agreement called for the earnings of the parties to be their separate property and co-mingled assets would be community property. If there were a divorce, each party would pay his/her own attorney's fees and costs, and if there were children from the marriage, Jeffrey would pay a set fee in child support. Nancy would receive no spousal support, but approximately $200,000 at the time of the divorce, a Jaguar car and all of the home furnishings. After having the agreement explained to her by two separate attorneys of her own choosing, Nancy signed the agreement and married Jeffrey. They had one child together, and while Jeffrey continued to go up the corporate ladder of success, Nancy never worked another day.

Fifteen years later, the marriage ended and they filed for divorce. Jeffrey asked the court to honor the terms of the premarital agreement, and Nancy asked the court to throw the agreement out because it was illegal and unfair. At trial, the judge threw out the premarital agreement saying that it was illegal because, by law, no one can agree to child support in a premarital agreement, and because the terms were so unfair to Nancy. Before the judge could make a judgment without the premarital agreement in effect, Jeffrey appealed.

The appellate court agreed with Nancy in part, and agreed with Jeffrey in part. The trial court was right about the illegality of the child support portion of the premarital agreement (courts determine child support), but that did not mean the rest of the document was invalid. Nancy received advice from two separate lawyers who told explained the documents to her. Although she was a high school graduate and Jeffrey was a lawyer, it did not mean that she could not understand what she was signing – especially if she had experts explain the document to her. Therefore, the portion of the document keeping their earnings separate was valid, and she was only entitled to whatever property had her name on it as well as Jeffrey's (such as, the house and a few bank accounts). A person can also waive the possible right to spousal support, but in Nancy's case, the court found the terms so unfair as to be against public policy. At the time of the agreement, Jeffrey was worth about $3,000,000. Nancy had no money or assets of her own. At the time of trial, Jeffrey had $10,000,000 in assets, and Nancy would receive about $1,000,000 from her share of the community property and the $200,000 from the premarital agreement. So court awarded her spousal support too.

A premarital agreement can be very important for someone about to married if that person needs to protect assets or financial stability in the event of divorce or death. However, these agreements are so technical that they should always be written by an expert in writing premarital agreements.

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